dumont 2010 audit report

8/6/2019 Dumont 2010 Audit Report

1/112

BOROUGH OF DUMONTBERGENCOUNTY, NEWJERSEY

REPORT OF AUDIT

YEAR ENDED DECEMBER31, 2010


2/112

Exhibits

AA-I

A-2A-3BCC-I

DE

A-4A-5A-6A-7A-8A-9A-IOA-IIA-12A-13A-14A-15A-16A-17A-18A-19A-20A-21A-22A-23A-24A-25A-26

BOROUGH OF DUMONT

TABLE OF CONTENTS

PART IIndependent Auditors' ReportComparative Balance Sheets - Regulatory Basis - Current FundComparative Statements ofOperations and Changes in Fund Balance -Regulatory Basis - Current FundStatement ofRevenues - Regulatory Basis - Current FundStatement ofExpenditures - Regulatory Basis - Current FundComparative Balance Sheets - Regulatory Basis - Trust FundsComparative Balance Sheets - Regulatory Basis - General Capital FundComparative Statements of Fund Balance - Regulatory Basis -General Capital FundComparative Balance Sheets - Regulatory Basis - Public Assistance FundComparative Balance Sheets - Regulatory Basis -General Fixed Assets Account GroupNotes to Financial StatementsCurrent Fund

Statement ofCash and Investments - Collector-TreasurerStatement of Petty Cash FundsStatement ofChange FundsStatement ofDue from State ofNew Jersey Senior Citizens' and Veterans' DeductionsStatement ofTaxes Receivable and Analysis of PropertyTax LevyStatement ofTax Title Liens ReceivableStatement of Property Acquired for Taxes (At Assessed Valuation)Statement ofOther ReceivablesStatement ofRevenue Accounts ReceivableStatement ofDeferred Charges - N.J.S. 40A:4-53 Special Emergency AuthorizationsStatement ofDeferred ChargesStatement ofGrants ReceivableStatement of 2009 Appropriation ReservesStatement of Encumbrances PayableStatement ofAccounts PayableStatement ofMiscellaneous ReservesStatement ofOther LiabilitiesStatement of Prepaid TaxesStatement ofTax OverpaymentsStatement of Local School District Tax PayableStatement ofCounty Taxes PayableSchedule ofAppropriated Grant ReservesStatement ofUnappropriated Reserves for Grants

1-23-456-8

9-1314-1516

1718

19

20-46

474848484950505051525252

53-5455555656575757585859


3/112

Exhibits

B-1B-2B-3B-4

B-5B-6B-7B-8B-9B-1OB-llB-12

C-2C-3C-4C-5C-6C-7C-8C-9C-1OC-llC-12C-13C-14C-15C-16C-17C-18C-19

BOROUGH OF DUMONTTABLE OF CONTENTS

(Continued)

Trust FuudsStatement ofTrust CashStatement ofDue To Current Fund - Other Trust FundStatement of Reserve for Animal Control ExpendituresStatement ofDue To State ofNew Jersey-Dog Regulation Fees

Statement ofDue To Current Fund - Animal Control FundStatement ofEscrow DepositsStatement ofReserve for Unemployment Insurance ExpendituresStatement ofMiscellaneous ReservesStatement ofReserve for Payroll and Payroll Deductions PayableStatement ofDue to State ofNew Jersey Unemployment Insurance FundStatement ofDue (to)/From Current Fund - Community Development Trust FundStatement ofDue from Payroll Service ProviderGeneral Capital FundStatement ofGeneral Capital Cash - Collector-TreasurerAnalysis ofGeneral Capital CashStatement ofDeferred Charges to Future Taxation - FundedStatement ofDeferred Charges to Future Taxation - UnfundedStatement ofGrants ReceivableStatement of Environmental Infrastructure Trust Loan ReceivableStatement ofDue From Current FundStatement ofDeferred Charges to Future Taxation - Cancelled ReceivablesStatement ofReserve for Payment ofDebtStatement ofGeneral Serial BondsSchedule ofPension Obligation Lease PayableStatement ofBond Anticipation NotesStatement of Improvement AuthorizationsStatement ofContracts PayableStatement ofGreen Trust Fund Loan PayableStatement of Environmental Infrastructure Trust Loan PayableStatement ofCapital Improvement FundStatement ofBonds and Notes Authorized But Not Issued

606161

616262626363636464

656667686969707070717273-74757676767677


4/112

D-1D-2D-3D-4D-5

BOROUGH OF DUMONTTABLE OF CONTENTS

(Continued)

Public Assistance FundStatement of Public Assistance Cash - TreasurerStatement ofReserve for Public Assistance ExpendituresStatement ofPublic Assistance RevenuesStatement of Public Assistance ExpendituresStatement ofDue to Current FundPart I IRepOlt on Internal Control Over Financial Reporting and on ComplianceAnd Other Matters Based on an Audit ofFinancial Statements Performed inAccordanceWith Government Auditing StandardsSchedule ofFederal Awards, Schedule ASchedule of State Financial Assistance, Schedule BNotes to the Schedules ofExpenditures of Federal Awards andState Financial Assistance

Schedule ofFindings and Responses

Par tm

Comparative Statement ofOperations and Changes in Fund Balance -Current Fund

Comparative Schedule ofTax Rate InformationComparison ofTax Levies and Collection CurrentlyDelinquent Taxes and Tax Title LiensProperty Acquired by Tax Title Lien LiquidationComparative Schedule ofFund BalancesOfficials in Office and Surety BondsGeneral CommentsRecommendations

7878797979

80-8182

83-84

85-8687-89

90919192929293

94-9798-99


5/112

BOROUGH OF DUMONTBERGEN COUNTY

PART IREPORT ON AUDIT OF FINANCIAL STATEMENTS

AND SUPPLEMENTARY SCHEDULESYEAR ENDED DECEMBER31, 2010


6/112

LERCH, VINCI & HIGGINS, LLPCERTIFIED PUBLIC ACCOUNTANTS

REGISTERED MUNICIPAL ACCOUNTANTS

17 - 17 ROUTE 208

DIETER P. LERCH, CPA, RMA, PSAGARY J. VINCI, CPA, RMA, PSAGARY W. HIGGINS, CPA, RMA, PSAJEFFREY C. BLISS, CPA, RMA, PSAPAUL J. LERCH, CPA, RMA, PSADONNA L. JAPHET, CPA, PSAJULIUS B. CONSONI, CPA, PSA

Honorable Mayor and Membersof the Borough CouncilBorough ofDumontDumont, New Jersey

FAIRLAWN,NJ 07410lELEPHONE (201) 791-7100FACSIMILE (201) 7913035WWW.LVHCPA.COM

INDEPENDENT AUDITORS' REPORT

ELIZABETH A. SHICK, CPA, RMA, PSAANDREW PARENTE, CPA, RMA, PSAROBERT W. HAAG, CPA, PSADEBORAH KOZAK, CPA, PSADEBRA GOLLE, CPACINDY JANACEK, CPA, RMARALPH M. PICONE, CPA, RMA, PSA

We have audited the accompanying balance sheets - regulatory basis of the varions fnnds and account group of the Borougof Dumont as of December 31, 2010 and 2009 and the related statements of operations and changes in fund balanceregulatory basis for the year then ended and the related statement of revenues - regulatory basis and statementexpenditures - regulatory basis of the Current Fund for the year ended December 31, 2010. These financial statements athe responsibility of the Borongh's management. Our responsibility is to express an opinion on these financial statemenbased on our audits.Except as discussed in the following paragraphs of this report. we conducted our audits in accordance with anditinstandards generally accepted in the United States of America; the standards applicable to financial audits containedGovernment Auditing Standards, issued by the Comptroller General of the United States; and audit requirements prescribeby the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standardrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are freematerial misstatement. An audit includes consideration of internal control over financial reporting as a basis for designinaudit procednres that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theffectiveness of the Borough of Dumont's internal control over financial reporting. Accordingly, we express no sucopinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financistatements. An audit also includes assessing the accounting principles used and significant estimates made by managemenas well as evalnating the overall financial statement presentation. We believe that our audits provide a reasonable basis foour opinion.As described more fully in Note 1, the Borough has prepared these financial statements using accounting practices thdemonstrates compliance with the regulatory basis of accounting and budget laws prescribed or permitted by the DivisionLocal Government Services, Department of CommunityAftairs, State ofNew Jersey, which practices differ from accountinprinciples generally accepted in the United States of America. The effect on the financial statements of the variancbetween these regulatory accounting practices and the accounting principles generally accepted in the United StatesAmerica, although not reasonably determinable, are presumed to be material. In addition, the financial statements of thLength of Service Awards Program (LOSAP) Trust Fund have not been audited, and we were not required by the DivisionLocal Government Services to audit norwere we engaged to audit the LOSAP Trust Fund financial statements as part of oaudit of the Borough's financial statements. The LOSAP financial activities are included in the Borough's Trust Fund, anrepresent 61 percent and 52 percent of the assets and liabilities respectively, ofthe Borough's Trust Funds as of Decemb31,2010 and 2009.


7/112

In our opinion, because of the effects of the Borough preparing its fmancial statements on the basis of accounting discussedin the preceding paragraph, the fmancial statements referred to above do not present fairly, in conformity with accountingprinciples generally accepted in the United States of America, the financial position of the Borough of Dumont as oDecember 3I, 20 I0 and 2009 or the results of its operations for the years then ended. Further, the Borough has not presenteda management's discussion and analysis that accounting principles generally accepted in the United States of America hasdetermined is necessary to supplement, although not required to be part of, the basic financial statements.In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had theLOSAP Trust Fund financial statements been audited, the financial statements - regulatory basis referred to above presenfairly, in all material respects, the fmancial position - regulatory basis of the various funds and account group of the BoroughofDumont as ofDecember 3 I, 2010 and 2009 and the results of operations and changes in fund balance - regulatory basis osuch funds for the years then ended and the statement of revenues - regulatory basis and the statement of expendituresregulatory basis of the Current Fund for the year ended December 3 I, 20 lOon the basis of accounting described in Note I.In accordance with Government Auditing Standards, we have also issued a report dated May 31, 20 lion our considerationof the Borough ofDumonfs internal control over financial reporting and our tests of its compliance with certain provisionof laws, regulations, contracts and grants agreements and other matters. The purpose of that report is to describe the scope oour testing of internal control over financial reporting and compliance and the results of that testing and not to provide anopinion on the internal control over financial reporting or on compliance. That report is an integral part of our audiperformed in accordance with Government Auditing Standards and should be considered in assessing the results of our auditOur audit was conducted for the purpose of forming an opinion on the financial statements of the Borough ofDumont. Thesupplementary schedules listed in the table of contents are presented for purposes of additional analysis and are not arequired part of the financial statements of the Borough of Dumont. Such information has been subjected to the auditingprocedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, inrelation to the financial statements taken as a whole on the basis of accounting described in Note I.

~


8/112

BOROUGH OF DUMONTCOMPARATIVE BALANCE SHEETS - REGULATORY BASIS

CURRENT FUNDAS OF DECEMBER 31, 2010 AND 2009

EXIllBITAPage I

ASSETS Reference 2010 2009Cash and Investments A-4 $ 2,810,099 $ 2,759,309Petty Cash A-5 250Change Fund A-6 250 250Grants Receivable A-15 53,164 94,950Due From State - Senior Citizens &Veterans Deductions A-7 9,309 10,809

2,872,822 2,865,568Receivables and Other Assets With Full ReservesDelinquent Property Taxes Receivable A-8 575,458 572,736Tax Title Lien A-9 3,022 2,401Property Acquired for Taxes A-IO 79,526 79,526Other Accounts Receivable A-II 2,007 20,768Revenue Accounts Receivable A-12 26,680Due from Other Trust Fund B-2 9,629 8,494Due from Animal Control Fund B-5 4,761 6,576Due from General Capital Fund C-8 1,337 17Due from Public Assistance Trust Fund 0-5 I I

702,421 690,519Deferred ChargesEmergency Authorizations A-14 7,818Special Emergency Authorizations A-13 14,000 43,000

14,000 50,818Total Assets $ 3,589,243 $ 3,606,905

The Accompanying Notes are an Integral Part ofthese Financial Statements3


9/112


CURRENT FUNDAS OF DECEMBER 31, 2010 AND 2009

(Continued)

EXHIBIT APage 2

LIABILITIES, RESERVES AND FUND BALANCE Reference 2010 2009LiabilitiesAppropriation Reserves A-3,A-16 $ 486,033 $ 453,559Encumbrances Payable A-17 425,119 600,061Accounts Payable A-18 9,718 6,900Other Liabilities A-20 2,979 7,716Miscellaneous Reserves A-19 322,112 334,587Prepaid Taxes A-21 124,885 136,367Tax Overpayments A-22 21,859 250Due to County for Added Taxes A-24 7,424 5,415School Taxes Payable A-23 10Appropriated Reserves for Grants A-25 134,110 74,756Unappropriated Reserves for Grants A-26 29,982 44,104

1,564,231 1,663,715Reserve for Receivables and Other Assets A 702,421 690,519Fund Balance A-I 1,322,591 1,252,671Total Liabilities, Reserves and Fund Balance $ 3,589,243 $ 3,606,905

The Accompanying Notes are an Integral Part of these Financial Statements4


10/112

EXHIBIT A-IBOROUGH OF DUMONT

COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE-REGULATORY BASIS - CURRENT FUND

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

REVENUES AND OTHER INCOME REALIZEDSurplus AnticipatedMiscellaneous Revenue AnticipatedReceipts from Delinquent TaxesReceipts from Current TaxesNon-Budget RevenuesOther Credits to Income1nterfunds ReturnedUnexpended Balance ofAppropriation ReservesStatutory Excess - Animal Control FundCancellations

Total RevenuesEXPENDITURESMunicipal BudgetCounty TaxesLocal District School Taxes1nterfund AdvanceRefund of Prior Year RevenuesTotal Expenditures

Excess in Revenues

Reference 2010 2009A-2 $ 805,000 $ 805,000A-2 2,523,454 2,734,500A-2 572,735 668,608A-2 50,908,783 49,193,855A-2 199,255 180,501A-I 2,554A-16 176,547 273,727B-6 4,761 6,579A-18 6,900 761

55,197,435 53,866,085

A-3 17,953,123 17,662,951A-24 4,441,522 4,530,850A-23 31,899,943 30,762,300A 640 7,044A-4 27,287 12,867

54,322,515 52,976,012

874,920 890,073Expenditures Included Above Which are by StatuteDeferred Charges to Budget of Succeeding Year A-14 7,818Statutory Excess to Fund Balance 874,920 897,891Fund Balance, January 1 A 1,252,671 1,159,780

2,127,591 2,057,671Decreased by:Utilization as Anticipated Revenue A-1,A-2 805,000 805,000Fund Balance, December 31 A $ 1,322,591 $ 1,252,671



11/112

EXHIBIT A-2Page 1

BOROUGH OF DUMONTSTATEMENT OF REVENUES - REGULATORY BASIS

CURRENT FUNDFOR THE YEAR ENDED DECEMBER 31, 2010

AnticipatedSpecial N.J.S. Realized Excess or

Reference Budget 40A:4-87 in 2010 (Deficit)Fund Balance Utilized A-I $ 805,000 $ 805,000Miscellaneous RevenuesLicensesAlcoholic Beverages A-12 8,500 12,627 $ 4,127Other A-2,A-12 3,800 5,388 1,588

Fees and PennitsConstruction Code Official A-12 198,000 159,582 (38,418)Recreation Fees A-12 62,394 55,742 (6,652)Other A-2, A-12 50,000 60,901 10,901Fines and Costs - Municipal Court A-12 150,000 176,618 26,618

Interest on Costs on Taxes A-12 105,000 82,940 (22,060)Interest on Investments and Deposits A-2,A-12 29,000 14,949 (14,051)Fire Inspections - Additional A-12 15,000 15,000Consolidated Municipal Property Tax ReliefA id A-12 81,332 200,033 118,701Energy Receipts Tax A-12 1,281,587 1,155,219 (126,368)Interlocal Agreement - Court Administrator - 2009 A-12 2,819 2,819Drunk Driving Enforcement Fund A-25 1,935 1,935Clean Community A-25 24,454 24,454Recycling Tonnage A-25 17,715 17,715Bergen County - Flu Vaccine A-26 $ 3,619 3,619Reserve for Sale ofAssets A-19 21,080 21,080Reserve for Revaluation A-19 61,279 61,279Other Trust Fund Reserves - Police Outside Svcs. B-8 130,852 130,852Health Benefit Contributions A-12 50,000 37,963 (12,037)Life Hazard Use Fees A-12 11,851 10,484 (1,367)Sale ofRecyclables A-12 40,000 49,814 9,814PILOT - Senior Citizen Club A-12 30,286 33,227 2,941Cable Television Franchise Fees A-12 189,214 189,214

Total Miscellaneous Revenues 2,566,098 3,619 2,523,454 (46,263)Receipts from Delinquent Taxes A-8 550,000 572,735 22,735Amount to be Raised by Taxes for Support

ofMunicipal Budget A-2 15,153,663 15,602,318 448,655Total Genvral Revenues A-3 $ 19,074,761 $ 3,619 19,503,507 $ 425,127

Non-Budget Revenues A-2 199,255$ 19,702,762



12/112

BOROUGH OF DUMONTSTATEMENT OF REVENUES - REGULATORY BASIS

CURRENT FUNDFOR THE YEAR ENDED DECEMBER 31, 2010

(Continued)

EXHIBIT A-2Page 2

ReferenceAnalysis ofRealized RevenuesAllocation ofCurrent Tax CollectionsRevenues from Collections A-I,A-8 $ 50,908,783Less: Allocation to School and County Taxes A-23,A-24 36,341,465Balance for Support ofMunicipal Budget Appropriation 14,567,318Add Appropriation - "Reserve for Uncollected Taxes" A-3 1,035,000

Amount for Support ofMunicipal Budget Appropriations A-2 $ 15,602,318Licenses-OtherBorough Clerk A-12 $ 5,091Board of Health A-12 297

A-2 $ 5,388Fees and Permits-OtherBorough ClerkPolicePlanning and ZoningFire PreventionBoard ofHealth

Interest on Investments and DepositsRevenue Accounts ReceivableDue from General Capital FundDue from Animal Control FundDue from Other Trust FundDue from Public Assistance Trust Fund


A-12A-12A-12A-12A-12A-2

A-12C-8B-5B-2D-5A-2

$

$

$

$

10,4502,6012,38525,80019,66560,901

14,5281115

3041

14,949


13/112

BOROUGH OF DUMONTSTATEMENT OF REVENUES - REGULATORY BASISCURRENT FUND

FOR THE YEAR ENDED DECEMBER 31, 2010(Continued)

Analysis ofNon-Budget RevenuePilot Swim ClubAT&T Tower RentalShopping CartsMiscellaneousAccrued Interest on BondsAdmin Fee - Srs. And VeteransDivision ofMotor VehiclesInsurance ReimbursementMetro PCS Monopole Rental6% PenaltyReimbursement of Costs - LibraryDemarest Tree ServicesWorkers Comp - Library 2009Film Shooting Permit FeesBergen County Polling ReimbursementReimbursement from Library

$

EXHIBIT A-2Page 3

10,32826,217250

11,2785,1784,1514,1403,12527,63814,32532,472412

4,19467522054,652


$ 199,255


14/112

BOROUGH OF DUMONTSTATEMENT OF EXPENDITURES - REGULATORY BASIS

CURRENT FUNDFOR TIlE YEAR ENDED DECEMBER 31, 2010

EXlllBIT A-3Page I

Appropriated ExpendedBudget After Paid or

OPERATIONS WITHIN "CAPS" 2010 Budget Modification Charged Reserved CancelledGENERAL GOVERNMENT FUNCTIONSGeneral Administration

Salaries and Wages $ 295,686 $ 300,689 $ 300,418 $ 271Other Expenses 67,165 66, I65 64,354 1,811Postage 17,000 17,699 17,699

Ethics BoardSalaries and Wages 540 270 270Other Expenses 2,850 2,850 2,518 332Codification ofOrdinances 9,500 9,500 2,847 6,653ElectionsOther Expenses 16,055 16,055 14,739 1,316Financial AdministrationSalaries and Wages 137,694 137,694 137,693 IOther Expenses 104,550 124,550 85,394 39,156

Assessment ofTaxesSalaries and Wages 24,581 19,581 19,581Other Expenses 4,132 4,532 4,263 269

Collection ofTaxesSalaries and Wages 70,674 70,226 70,226Other Expenses 12,877 13,877 13,797 80

Legal Services and CostsBorough Attorney - Other Expenses 71,250 59,250 58,688 562Other Expenses 49,400 49,400 38,441 10,959

EngineeringOther Expenses 66,500 88,500 86,841 1,659

Planning Board/Zoning BoardSalaries and Wages 2,000 1,667 1,500 167Other Expenses 14,250 12,650 10,262 2,388InsuranceUnemployment Insurance 44,000 44,000 44,000General Liability 305,000 310,181 302,409 7,772Workers Compensation 285,346 285,346 285,346Employee Group Health 1,467,466 1,467,466 1,467,466

Rent Leveling BoardSalaries and Wagcs 540 450 450Other Expenses 2,850 2,850 1,804 1,046

PUBLIC SAFETY FUNCTIONSFire Department

Other Expenses 104,032 104,032 97,429 6,603Life Hazard Use FeesSalaries and Wages 29,958 27,307 27,307Other Expenses 6,460 6,460 5,033 1,427

Aid to Volunteer Fire Companies 36,100 36,100 36,100Rental of Fire Houses 28,000 28,000 28,000Fire Hydrant Services 171,915 171,915 165,791 6,124

Police DepartmentSalaries andWagcs 4,422,880 4,374,558 4,330,348 44,210Other Expenses 140,061 140,061 125,765 14,296Police Reserve - Other Expenses 2,375 2,375 2,009 366Emergency Management 4,750 4,750 1,196 3,554

Volunteer Ambulance Corp.Other Expenses 28,500 26,000 26,000Municipal ProsecutorSalaries and Wages 7,788 7,788 7,788Other Expenses 475 475 475The Accompanying Notes are an Integral Part of these Financial Statements

9


15/112

EXHIBIT A-3Page 2BOROUGH OF DUMONTSTATEMENT OF EXPENDITURES - REGULATORY BASISCIJRRENTFUNDFOR THE YEAR ENDED DECEMBER 31, 2010Appropriated ExpendedBudget After Paid or2010 Budget Modification Charged Reserved Cancelled

PUBLIC WORKS FUNCTIONSStreets and Road MaintenanceSalaries and Wages $ 1,584,934 $ 1,595,934 $ 1,594,162 $ 1,772Other Expenses 209,300 216,300 195,603 20,697RecyclingSalaries and Wages 3,650 3,778 3,778Garbage and Trash RemovalOther Expenses 1,314,516 1,314,516 1,249,336 65,180Sewer SystemOther Expenses 10,000 10,000 5,691 4,309Public Building and GroundsSalaries and Wages 104,302 101,535 100,667 868Other Expenses 48,070 48,070 40,223 7,847Shade TreeOther Expenses 46,500 45,967 39,361 6,606

HEALTH AND HUMAN SERVICES FUNCTIONSBoard of HealthSalaries and Wages 16,516 16,516 16,516Other Expenses 86,840 89,340 89,216 124Other Expenses-Contractual (Animal Shelter) 28,176 27,676 27,305 371Hepatitis Program 3,000 1,000 565 435Environmental CommissionOther Expenses 950 950 452 498Administration of Public AssistanceSalaries andWages 8,112 5,461 5,461Other Expenses 1,187 1,187 29 1,158Aid to Community Center for Mental Health 9,000 9,000 8,000 1,000

PARKS AND RECREATION FUNCTIONSSenior CitizensSalaries and Wages 64,578 64,587 64,587Other Expenses 19,950 19,950 13,554 6,396Parks and PlaygroundsSalaries and Wages 128,757 109,768 109,768Other Expenses 58,140 58,140 58,140OTHER COMMON OPERATING FUNCTIONSCelebration of Public EventsOther Expenses 30,000 30,000 24,825 5,175MUNICIPAL COURTSalaries and Wages 120,168 112,018 112,018

Other Expenses 7,647 9,347 8,535 812Publie Defender (P.L. 1997, C.256)Salaries and Wages 4,867 4,867 4,867UNIFORMCONSTRUCTION CODEAPPROPRJATI0NS OFFSET BY DEDiCATEDREVENUES (N.JAC. 5:23-4-17)CODE ENFORCEMENTAND ADMINISTRATIONSalaries and Wages 175,941 171,125 17l,125Other Expenses 14,321 14,321 13,086 1,235



16/112

EXHIBIT A-3Page 3


CURRENT FUNDFOR THEYEAR ENDED DECEMBER 31, 2010

Appropriated ExpendedBudget After Paid or

OPERATIONS WITHIN "CAPS" (Cont'd) 2010 Budget Modification Charged Reserved CancelledUNCLASSIFIEDUtilitiesGasoline $ 120,Oll $ 148,011 $ 134,431 $ 13,580Electricity 180,000 205,000 184,019 20,981Telephone 58,000 51,000 48,643 2,357Street Lighting 195,000 189,000 176,235 12,765Water 14,000 22,000 16,710 5,290Total Operations Within "CAPS" 12,721,633 12,731,633 12,401,155 330,478

Detail:Salaries and Wages 7,204,166 7,125,549 7,078,260 47,289Other Expenses 5,517,467 5,606,084 5,322,895 283,189

DEFERRED CHARGES AND REGULATORYEXPENDITURES-MUNICIPAL-WITHIN "CAPS"Contribution to:Social Security System (G.A.S.!.) 320,000 310,000 306,134 3,866Public Employees' Retirement System 244,969 244,969 244,969Police and Firemen's Retirement Fund ofN] 759,444 759,444 759,444Total Deferred Charges and StatutoryExpenditures - Within "CAPS" 1,324,413 1,314,413 1,310,547 3,866

Total General Appropriations forMunicipal Purposes within "CAPS" 14,046,046 14,046,046 13,711,702 334,344OPERATIONS - EXCLUDED FROM "CAPS"UTILITY EXPENSES AND BULK PURCHASESBergen County Utilities Authority-Contractual 1,516,204 1,516,204 1,516,204

EDUCATION FUNCTIONSMaintenance of Free Public Library 752,224 752,224 752,224

GENERAL GOVERNMENT FUNCTIONSReserve for Tax Appeals 40,000 40,000 40,000

PUBLIC SAFETY FUNCTIONSLength of Service Awards Program (LOSAP) 70,000 70,000 70,000

INSURANCEEmployee Group Health 49,434 49,434 17,981 31,453

STATUTORY EXPENDITURESPolice and Fireman's Retirement'System ofNJ 17,257 17,257 17,257Public Employees' Retirement System 26,455 26,455 26,455

Stonn Related Expenses - State of Emergency 30,000 30,000 6,350 23,650Total Other Operations - Excluded from "CAPS" 2,501,574 2,501,574 2,376,471 125,103

The Accompanying Notes are an Integral Part of these Financial StatementsI I


17/112

EXHIBIT A-3Page 4


CURRENT FUNDFOR THE YEAR ENDED DECEMBER 31,2010

AppropriatedBudget After

2010 Budge t Modif icat ion

ExpendedPaid orCharged Reserved CancelledOPERATIONS - EXCLUDED FROM "CAPS" (Cont'd)

INTERLOCAL MUNICIPAL SERVICE AGREEMENTSBorough ofDemarest- Court Administration $ 2,819 $ 2,8 I 9 ,,-$_ ~ 2 ' c " 8 1 = 9Total Interlocal Municipal Service Agreements 2,819 2,819 2,819

PUBLIC AND PRlVATE PROGRAMSOFFSET BY REVENUESFEDERAL AND STATE GRANTS

Drunk Driving Enforcement Fund - State ShareClean CommunitiesGrantState ShareBergen CountyFlu VaccineRecycling Tonnage GrantOther ExpensesTotal Public and Private Programs Offsetby RevenuesTotal Operations Excluded from "CAPS"

Detail:Salaries and WagesOther Expenses

1,935 1,935 $ 1,93524,454 24,454 17,543 6,9Il3,619 3,619 3,594 2517,715 17,715 17,715

47,723 47,723 21,137 26,5862,552,116 2,552,1l6 2,400,427 151,689

2,819 2,819 2,8192,549,297 2,549,297 2,397,608 151,689CAPITAL IMPROVEMENTS-EXCLUDED FROM "CAPS"Capital Improvement FundTotal Capital Improvements - Excluded from "CAPS"

80,00080,000

81,25281,252

81,25281,252

MUNICIPAL DEBT SERVICE EXCLUDED FROM "CAPS"

Payment of Bond PrincipalPayment ofBond Anticipation Note PrincipalInterest on BondsInterest on NotesGreen TrustLoan Repayments for Principal and InterestLoan Repayments for Principal and Interest MMultiMParks

Bergen County Improvement Authority MLoan RepaymentNJEIT Loan PrincipalNJEIT Loan InterestTotal Municipal Debt Service MExcluded from "CAPS"

490,000 490,000 490,000307,91 I 276,762 197,585146,004 146,004 146,00393,626 123,523 116,11 I7,027 7,027 7,02712,437 12,437 12,43765,321 65,321 65,321143,731 143,731 143,73062,343 62,343 58,677

1,328,400 1,327,148 1,236,891

$ 79,17717,412

I3,66690,257



18/112

EXHIBIT A-3Page 5


CURRENT FUNDFOR THEYEAR ENDED DECEMBER 31, 2010

AppropriatedBudget After

20 I0 Budget ModificationExpended

Paid orCharged Reserved CancelledDEFERRED CHARGESEmergency Authorizations $ 7,818 $ 7,818 $ 7,818Special Emergency Authorizations5 yrs. (N.J.S. 40A:4-55) 29,000 29,000 29,000Total Deferred Charges - MunicipalExcluded from "CAPS" 36,818 36,818 36,818Total General Appropriations for MunicipalPurposes Excluded from HeAPS" 3,997,334 3,997,334 3,755,388 $ 151,689 $ 90,257Subtotal General Appropriations 18,043,380 18,043,380 17,467,090 486,033 90,257

RESERVE FOR UNCOLLECTED TAXES 1,035,000 1,035,000 1,035,000Total General Appropriations $ 19,078,380 $ 19,078,380 $ 18,502,090 $ 486,033 $ 90,257

Adopted BudgetChapter 159 - N.J.S.A. 40A:4-87

Cash Disbursements (net)Encumbrances PayableEmergency AuthorizationDue to Unemployment Trust FundSpecial Emergency AuthorizationsReserve for Tax AppealsReserve for Uncollected Taxes

ReferenceA-2A-2

A-4A-17A-14B-7A-13A-19A-2

A-2$ 19,074,761

3,619$ 19,078,380

A

$ 16,921,153425,1197,81844,00029,00040,0001,035,000

$ 18,502,090

The AccompanyingNotes are an Integral Partof these Financial Statements13


19/112

EXHIBIT BPage I


TRUST FUNDSAS OF DECEMBER31, 2010 AND 2009

Reference 2010 2009ASSETS

Animal Control FundCash B-1 $ 16,079 $ 18,09716,079 18,097

Other Trust FundCash B-1 408,785 498,878408,785 498,878

Unemployment Insurance Trust FundCash B-1 37,312 30,855Due from Payroll Service Provider B-12 740 895

38,052 31,750Length of Service Award Program Fund (Unaudited)

Investment B 660,655 550,852Contribution Receivable B 53,800 55,200714,455 606,052

Total Assets $ 1,177,371 $ 1,154,777



20/112

EXHIBITBPage 2


TRUST FUNDSAS OF DECEMBER31, 2010 AND 2009

Reference 2010 2008LIABILITIES, RESERVES AND FUND BALANCE

Animal Control FundDue to State ofNew Jersey B-4 $ 146 $ 89Due to Current Fund B-5 4,761 6,576Reserve for Animal Control Expenditures B-3 I I,I 72 II,432

16,079 18,097Other Trust FundReserve for Developers Escrow B-6 74,582 118,744Miscellaneous Reserves B-8 256,956 313,862Payroll Deductions Payable B-9 67,618 57,778Due to Current Fund B-2 9,629 8,494

408,785 498,878Unemployment Insurance Trust FundDue to State ofNew Jersey B-IO 9,441 3,276Reserve for Unemployment Insurance Expenditures B-7 28,6II 28,474

38,052 31,750

Length of Service Award Program Fund (Unaudited)Reserve for Length of Service Award Program B 714,455 606,052

Total Liabilities, Reserves and Fund Balance $ 1,177,371 $ 1,154,777

The Accompanying Notes are an Integral Part ofthese Financial Statements15


21/112


GENERALCAPITAL FUNDAS OF DECEMBER31, 2010 AND 2009

EXHIBITC

Reference 2010 2009ASSETSCash C-2, C-3 $ 1,270,004 $ 807,079Grants Receivable C-6 293,175 651,984Environmental Infrastructure Trust Loans Receivable C-7 3,815,000Deferred Charges to Future TaxationFunded C-4 19,827,826 8,150,060Unfunded C-5 2,800,148 13,674,988Cancelled Receivables C-9 185,747

Total Assets $ 28,191,900 $ 23,284,111

LIABILITIES, RESERVES AND FUND BALANCEBond Anticipation Notes C-13 $ 910,000 $ 8,428,206General Serial Bonds C-11 11,938,000 3,898,000Pension Obligation Lease Payable C-12 907,000 925,000Green Acres Trust Fund Loan Payable C-16 186,351 201,854Environmental Infrastructure Trust Loan Payable C-17 6,796,475 3,125,206Improvement AuthorizationsFunded C-14 4,189,531 184,703Unfunded C-14 1,624,359 5,487,929Contracts Payable C-15 1,506,734 923,515Due to Current Fund C-8 1,337 17Capital Improvement Fund C-18 6,698Reserve for Payment ofDebt C-10 21,718Fund Balance C-1 110,395 102,983

Total Liabilities, Reserves and Fund Balance $ 28,191,900 $ 23,284,111

There were bonds and notes authorized but not issued of $1 ,890, 148 and $5,246,782 at December 3 I,2010 and 2009, respectively (Exhibit C-19).



22/112

EXHIBITC-I

BOROUGH OF DUMONTCOMPARATIVE STATEMENTS OF FUND BALANCE - REGULATORY BASIS

GENERAL CAPITAL FUNDFOR THE YEARS ENDED DECEMBER31, 2010 AND 2009

Reference 2010 2009Balance, January I C $ 102,983 $ 44,654Increased by:Improvement Authorizations Cancelled C-14 6,464Premium on Bond Anticipation Notes C-8 948 58,329

Balance, December 31 C $ 110,395 $ 102,983



23/112

EXHIBIT 0BOROUGH OF DUMONT

COMPARATIVE BALANCE SHEETS - REGULATORY BASISPUBLIC ASSISTANCE FUND

AS OF DECEMBER 31, 2010 AND 2009

ReferenceASSETSCash - PATF I

LIABILITIES

D-I $$

7,731 ",$__ ~ 7 , , - , 4 ~ 3 " , 57,731 ; : ; , $ ~ ~ . ; " , 7 , ~ 4 3 ; ; , ; ; , 5

Due to Current FundReserve for Goodwill 0-50-2 $ I $7,730 I7,434


$ 7,731 ; : ; , $ ~ ~ . ; " , 7 , ~ 4 3 ; ; , ; ; , 5


24/112

BOROUGH OF DUMONTGENERAL FIXED ASSETS ACCOUNT GROUP

COMPARATIVE BALANCE SHEETS - REGULATORY BASISAS OF DECEMBER 31, 2010 AND 2009

EXHIBIT E

2010 2009ASSETS

Land and Land Improvements $ 3,093,893 $ 3,093,893Buildings and Building Improvements 4,179,516 4,162,564Vehicles and Equipment 6,277,706 6,111,184

$ 13,551,115 $ 13,367,641FUND BALANCE

Investment in General Fixed Assets $ 13,551,1 IS $ 13,367,641



25/112

NOTES TO FINANCIAL STATEMENTS


26/112

BOROUGH OF DUMONTNOTES TO FINANCLALSTATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 1 SUMMARYOF SIGNIFICANTACCOUNTING POLICIESThe financial statements of the Borough of Dumont have been prepared on a basis of accounting in conformity withaccounting principles and practices prescribed or permitted by the Division ofLocal Government Services, Departmenof Community Affairs, State of New Jersey (the "Division") which is a regulatory basis of accounting other thanaccounting principles generally accepted in the United States ofAmerica (GAAP). Such principles and practices aredesigned primarily for determining compliance with legal provisions and budgetary restrictions and as a means ofreporting on the stewardship of public officials with respect to public funds. Under this method of accounting, theBorough accounts for its financial transactions through separate funds, which differ from the fund structure required byGAAP.The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishinggovernmental accounting and financial reporting principles. GASB has adopted accounting statements to be used bygovernmental units when reporting financial position and results ofoperations in accordance with accounting principlesgenerally accepted in the United States of America. (GAAP). The municipalities in the State of New Jersey do notprepare financial statements in accordance with GAAP and thus do not complywith all of the GASB pronouncements.

A. Reporting EntityThe Borough of Dumont (the "Borough") was incorporated in 1894 and operates under an elected Mayor/Council formof government. The Borough's major operations include public safety, road repair and maintenance, sanitation, fireprotection, recreation and parks, health services, and general administrative services.GASB requires the financial reporting entity to include both the primary government and component units. Componentunits are legally separate organizations for which the Borough is financially accountable. The Borough is financiallyaccountable for an organization if the Borough appoints a voting majority of the organization's governing board and (1)the Borough is able to significantly influence the programs or services performed or provided by the organization; or (2)the Borough is legally entitled to or can otherwise access the organization's resources; the Borough is legally obligatedor has otherwise assumed the responsibility to finance the deficits of, or provide financial support to, the organization;or the Borough is obligated for the debt of the organization. Component units may also include organizations that arefiscally dependent on the Borough in that the Borough approves the budget, the issuance of debt or the levying of taxes.The Borough is not includable in any other reporting entity as a component unit.The financial statements contained herein include only those boards, bodies, officers or commissions as required byNJS 40A:5-5. Accordingly, the financial statements of the Borough do not include the municipallibnlly, volunteer firedepartment or volunteer ambulance squad, which are considered component units under GAAP. Complete financialstatements of the above component units can be obtained by contacting the Treasurer of the respective entity.

B.Measurement Focus, Basis of Accounting and Financial Statement PresentationThe Borough uses funds, as required by the Division, to report on its financial position and the results of its operations.Fund accounting is designed to demonstrate legal compliance and to aid financial administration by segregatingtransactions related to certain Borough functions or activities. The Borough also uses an account group, which isdesigned to provide accountability for certain assets that are not recorded in those Funds.

20


27/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER31, 2010 AND 2009

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Measurement Focus, Basis ofAccounting and Financial Statement Presentation (Continned)The Borough has the following funds and account group:Current Fund - This fund is used to account for the revenues and expenditures for governmental operations of ageneral nature and the assets and liabilities related to such activities, including Federal and State grants noaccounted for in another fund.Trust Funds - These funds are used to account for assets held by the government in a trustee capacity. Funds held bythe Borough as an agent for individuals, private organizations, or other governments are recorded in the Trust Funds.

Animal Control Fund - This fund is used to account for fees collected from dog and cat licenses andexpenditures which are regulated byNJS 4: 19-15.11.Other Trust Fund - This fund is established to account for the assets and resources, which are held by theBorough as a trustee or agent for individuals, private organizations, other governments and/or other fundsThese funds include dedicated fees/proceeds collected, developer deposits, payroll related deposits andfunds deposited with the Borough as collateral.Unemployment Insurance Fund - This fund is used to account for employee and employer contributions forthe purpose of providing unemployment benefits to former eligible employees.Length ofService Awards Program Fund (LOSAP) - This fund is established to account for the tax-deferredincome benefits to active volunteer members of emergency service organizations of the Borough.

General Capital Fund - This fund is used to account for the receipt and disbursement of funds used and relatedfinancial transactions related to the acquisition or improvement of general capital facilities and other capital assetsother than those acquired in the Current Fund.Public Assistance Fund - This fund is used to account for the receipt and disbursement of funds that provideassistance to certain residents of the Borough pursuant to Title 44 ofNew Jersey Statutes.General Fixed Assets Account Group - This account group is used to account for all general fixed assets of theBorough. The Borough's infrastructure is not reported in the account group.

The Borough of Dumont follows a modified accrual basis of accounting. Under this method of accounting, revenuesexcept State/Federal Aid, are recognized when received and expenditures are recorded when incurred. The accountingprinciples and practices prescribed or permitted for municipalities by the Division ("regulatory basis of accounting"differ in certain respects from accounting principles generally accepted in the United States of America (GAAPapplicable to local government units. The more significant differences are as follows:

21


28/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDEDDECEMBER 31, 2010 AND 2009

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

B. Measurement Focns, Basis ofAcconnting and Financial Statement Presentation (Continned)Property Tax Revennes - Real property taxes are assessed locally, based upon the assessed value of the property. Thetax bill includes a levy for Municipal, County, and School purposes. The bills are mailed annually in June for thacalendaryear's levy. Taxes are payable in four quarterly installments on February I, May 1, August I, and November 1The amounts of the first and second installments are determined as one-quarter of the total tax levied against theproperty for the preceding year. The installment due the third and fourth quarters is determined by taking the currenyear levy less the amount previously charged for the first and second installments, with the remainder being dividedequally. If unpaid on these dates, the amount due becomes delinquent and subject to interest at 8% per annum, or 18%on any delinquency amount in excess of $1,500. A penalty of up to 6% of the delinquency may be imposed on ataxpayer with a delinquency in excess of $1 0,000 who fails to pay that delinquency prior to the end of the fiscal year inwhich the charges become delinquent. The school levy is turned over to the Board of Education as expenditures areincurred, and the balance, if any, must be transferred as of June 30, of each fiscal year. County taxes are paid quarterlyon February 15, May 15, August 15 and November 15, to the County by the Borough. When unpaid taxes or anymunicipal lien, or part thereof, on real property, remains in arrears on April first in the year following the calendar yealevy when the same became in arrears, the collector in the municipality shall, subject to the provisions of the NewJersey Statutes, enforce the lien by placing the property on a standard tax sale. The Borough also has the option whenunpaid taxes or any municipal lien, or part thereof, on real property remains in arrears on the II th day of the eleventhmonth in the fiscal year when the taxes or lien became in arrears, the collector in the municipality shall, subject to theprovisions of the New Jersey Statutes, enforce the lien by placing property on an accelerated tax sale, provided that thesale is conducted and completed no earlier than in the last month of the fiscal year. The Borough may institute annuain rem tax foreclosure proceedings to enforce the tax collection or acquisition of title to the property. In accordancewith the accounting principles prescribed by the State of New Jersey, current and delinquent taxes are realized asrevenue when collected. Since delinquent taxes and liens are fully reserved, no provision has been made to estimatethat portion of the tax receivable and tax title liens that are uncollectible. GAAP requires property tax revenues to berecognized in the accounting period when they become susceptible to accrual (i.e., when they are both levied andavailable), reduced by an allowance for doubtful accounts.Miscellaneous Revenues - Miscellaneous revenues are recognized on a cash basis. Receivables for the miscellaneousitems that are susceptible to accrual are recorded with offsetting reserves on the balance sheet of the Borough's CurrenFund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible toaccrual (i.e., when they are both measurable and available).Grant and Similar Award Revenues - Federal and State grants, entitlements or shared revenues received for purposesnormally financed through the Current Fund are recognized when anticipated in the Borough's budget. GAAP requiressuch revenues to be recognized as soon as all eligibility requirements imposed by the grantor or provider have been met.Budgets and Budgetary Accounting - An annual budget is required to be adopted and integrated into the accountingsystem to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanyingfinancial statements represent amounts adopted by the Borough and approved by the State Division of LocaGovernment Services per NJ.S.A. 40A:4 et seq.

22


29/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDEDDECEMBER 31,2010 AND 2009

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)B. Measnrement Focus, Basis ofAccounting and Financial Statement Presentation (Continued)

Budgets and Bndgetary Acconnting (Continued)The Borough is not required to adopt hudgets for the following funds:

Trust FundsGeneral Capital FundPublic Assistance FundThe governing body is required to introduce and approve the annual budget no later than February 10, of the fiscal year.The budget is required to be adopted no later than March 20, and prior to adoption must be certified by the Division ofLocal Government Services, Department ofCommunity Affairs, State ofNew Jersey. The Director of the Division ofLocal Government Services, with the approval of the Local Finance Board may extend the introduction and approvaland adoption dates of the municipal budget. The budget is prepared by fund, function, activity and line item (salary orother expense) and includes information on the previous year. The legal level of control for appropriations is exercisedat the individual line item level for all operating budgets adopted. The governing body of the municipality mayauthorize emergency appropriations and the inclusion of certain special items of revenue to the budget after its adoptionand determination of the tax rate. During the last two months of the fiscal year, the governing body may, by a 2/3 vote;amend the budget through line item transfers. Management has no authority to amend the budget without the approvalof the Governing Body. Expenditures may not legally exceed budgeted appropriations at the line item level. During2010 and 2009 the Borough Council increased the original budget by $3,619 and $11,818. The increases were fundedby additional aid allotted to the Borough and emergency appropriations authorized by the Borough Council. [naddition, the governing body approved several budget transfers during 2010 and 2009.Expenditures - Expenditures are recorded on the "budgetary" basis of accounting. Generally, expenditures arerecorded when an amount is encumbered for goods or services through the issuance of a purchase order in conjunctionwith an encumbrance accounting system. Outstanding encumbrances at December 31, are reported as a cash liability inthe financial statements. Unexpended or uncommitted appropriations, at December 31, are reported as expendituresthrough the establishment of appropriation reserves unless cancelled by the governing body. GAAP requiresexpenditures to be recognized in the accounting period in which the fund liability is incurred, if measurable, except forumnatured interest on general long-term debt, as well as expenditures related to compensated absences and claims andjudgements, which are recognized when due.Encumbrances - Contractual orders outstanding at December 31, are reported as expenditures and liabilities throughthe establishment of an encumbrance payable. Encumbrances do not constitute expenditures or liabilities under GAAP.Appropriation Reserves - Appropriation reserves are recorded as liabilities and are available, until lapsed at the closeof the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding year. Lapsedappropriation reserves are recorded as additions to income. Appropriation reserves do not exist under GAAP.Compensated Absences - Expenditures relating to obligations for unused vested accumulated vacation and sick leaveare not recorded until paid; however, municipalities may establish and budget reserve funds subject to NJSA 40A:4-39for the future payment of compensated absences. GAAP requires that the amount that would normally be liquidatedwith expendable available financial resources be recorded as an expenditure in the operating funds and the remainingobligations are recorded as a long-term obligation in the government-wide financial statements.

23


30/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31,2010 AND 2009

NOTE 1 SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Contiuued)B.Measurement Focus, Basis of Acconnting and Financial Statement Presentation (Continued)

Property Acquired for Taxes - Property acquired for taxes is recorded in the Current Fund at the assessed valuationwhen such property was acquired, and is fully reserved. GAAP requires such property to be recorded as a capital assetin the government-wide financial statements at fair value on the date ofacquisition.Interfunds - Interfund receivables in the Current Fund are recorded with offsetting reserves, which are created bycharges to operations. Income is recognized in the year the receivables are liquidated. Interfund receivables in theother funds are not offset by reserves. GAAP does not require the establishment of an offsetting reserve for interfundsand, therefore, does not recognize income in the year liquidated.Inventories - The costs of inventories of supplies for all funds are recorded as expenditures at the time individual itemsare purchased. The costs of inventories are not included on the various balance sheets. GAAP requires inventories tobe recorded as assets in proprietary-type funds.Cash and Investments - Cash includes amounts in demand deposits as well as short-term investments with a maturitydate within three months of the date acquired by the government. Investments are reported at cost and are limited byN.J.S.A. 40A:5-15.1 et seq. with the exception of LOSAP Trust Fund investments which are reported at fair value andare limited byNJ.A.C. 5:30-14.19. GAAP requires that all investments be reported at fair value.Tax Appeals and Other Contingent Losses - Losses arising from tax appeals and other contingent losses arerecognized at the time a decision is rendered by an administrative or judicial body; however, municipalities mayestablish reserves transferred from tax collections or by budget appropriation for future payments of tax appeal losses.GAAP requires such amounts to be recorded when it is probable that a loss has been incurred and the amount of suchloss can be reasonably estimated.General Fixed Assets - In accordance with NJAC 5:30-5.6, Accounting for Governmental Fixed Assets, the BoroughofDumont has developed a fixed assets accounting and reporting system.Fixed assets used in governmental operations (general fixed assets) are accounted for in the General Fixed AssetsAccount Group. Public domain ("infrastructure") general fixed assets consisting of certain improvements other thanbuildings, such as roads, bridges, curbs and gutters, streets and sidewalks and sewerage and drainage systems are notcapitalized.Fixed Assets purchased after December 31, 2008 are stated as cost.Fixed Assets purchased prior to December 31, 2008 are stated as follows:

LandBuildingsMachinery and Equipment

No depreciation has been provided for in the financial statements.

24

Estimated Historical CostAssessed Value and/or CostReplacement Cost


31/112

BOROUGHOF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31,2010 AND 2009

NOTE 1 SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)B. Measnrement Focus. Basis ofAccounting and Financial Statement Presentation (Continued)

General Fixed Assets (Continued)Expenditures for construction in progress are recorded in the General Capital Fund until such time as the construction iscompleted and put into operation for general fixed assets.GAAP requires that capital assets be recorded in proprietary-type funds as well as the government-wide financialstatement at historical or estimated historical cost if actual historical cost is not available.Use of Estimates - The preparation of financial statements requires management of the Borough to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements and the reported amounts of accrued revenues and expendituresduring the reporting period. Accordingly, actual results could differ from those estimates.Reclassifications - Certain reclassifications have been made to the December 31, 2009 balances to conform to theDecember 31, 20 I0 presentation.Comparative Data - Comparative data for the prior year has been presented in the accompanying financial statementsin order to provide an understanding of changes in the Borough's financial position and operations. Howevercomparative data have not been presented in all statements because their inclusion would make certain statementsunduly complex and difficult to understand.

C. Basic Financial StatementsThe GASB Codification also requires the financial statements of a governmental unit to be presented in the basicfinancial statements in accordance with GAAP. The Borough presents the financial statements listed in the table ocontents which are required by the Division and which differ from the financial statements required by GAAP. Inaddition, the Division requires the financial statements listed in the table of contents to be referenced to thesupplementary schedules. This practice differs from reportiug requirements under GAAP.

NOTE 2 DEPOSITS AND INVESTMENTSThe Borough considers petty cash, change funds, cash in banks, certificates of deposit and deposits with the New JerseyCash Management Fund as cash and cash equivalents.DepositsThe Borough's deposits are insured through either the Federal Deposit Insurance Corporation (FDIC), SecuritiesInvestor Protection Corporation (SIPC) or New Jersey's Governmental Unit Deposit Protection Act (GUDPA). TheBorough is required to deposit their funds in a depository which is protecting such funds pursuant to GUDPA. TheNew Jersey Governmental Unit Deposit Protection Act requires all banks doing business in the State ofNew Jersey topledge collateral equal to at least 5% of the average amount of its public deposits and 100% of the average amount oits public funds in excess of 75% of its capital funds or $200million for all deposits not covered by the FDIC.

25


32/112

BOROUGHOF DUMONTNOTES TO FINANClAL STATEMENTSYEARS ENDEDDECEMBER 31, 2010 AND 2009

NOTE 2 DEPOSITS AND INVESTMENTS (Continued)Deposits (Continued)Bank balances are insured up to $250,000 in the aggregate by the FDIC for each bank. SIPC replaces cash claims up toa maximum of $250,000 for each failed brokerage firm. At December 31, 2010 and 2009, the book value of theBorough's deposits were $4,550,260 and $4,122,153 and bank and brokerage firm balances of the Borough's depositsamounted to $4,935,597 and $4,487,775, respectively. The Borough's deposits which are displayed on the variousfund balance sheets as "cash" are categorized as:Depository Account

Insured $

Bank Balance2010 2009

4,935,597 , ; ; ; . $ _ ~ 4 ~ , 4 ~ 8 7 " , " , 7 ; , . ; 7 . ; . . 5Custodial Credit Risk - Deposits - Custodial credit risk is the risk that in the event of a bank failure, thegovernment's deposits may not be returned to it. The Borough does not have a formal policy for custodial credirisk. As ofDecember 31,2010 and 2009, the Borough's bank deposits were not exposed to custodial credit risk.InvestmentsThe Borough is permitted to invest public funds in accordance with the types of securities authorized by NJ.S.A40A:5-15.1. Investments include bonds or other obligations of the United States or obligations guaranteed by theUnited States of America, Government Money Market Mutual Funds, bonds or other obligations of the Borough orbonds or other obligations of the school districts which are a part of the Borough or school districts located within theBorough, Local Government investment pools, and agreements for the repurchase of fully collateralized securities, itransacted in accordance with NJSA 40A:5-15.1 (8a-8e). In addition, the Borough is permitted to invest LOSAP Fundswith the types of eligible investments authorized in NJAC 5:30-14.19. LOSAP investments include interest bearingaccounts or securities, in which savings banks of New Jersey are authorized to invest their funds, New Jersey CashManagement Fund, fixed and variable individual or group annuity contracts, mutual fund shares or fixed and variablelife insurance contracts.As of December 31, 20 I0 and 2009, the Borough had the following investments:

Fair and Book Value

Investment in Lincoln Financial (LOSAP)

26

$ 660,655 :;.$__ ~ 5 ~ 0 ; , ; , 8 : : ; ; 5 " , , 2


33/112

BOROUGHOF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 2 DEPOSITSAND INVESTMENTS (Continued)

Custodial Credit Risk - Investments - For an investment, this is the risk, that in the event of the failure of thecounterparty, the Borough will not be able to recover the value of its investments or collateral securities that are held byan outside party. The Borough does not have a policy for custodial risk. As of December 31, 2010 and 2009,$660,655 and $550,852 of the Borough's investments was exposed to custodial credit risk as follows:

Uninsured and Collateralized:Collateral held by pledging financial institution's trustdepartment but not in the Borough's name $ 660,655 ~ $ ~ ~ . ; ; 5 ; ; , ; 5 0 ~ , 8 ; ; ; ; ; 5 ~ 2

Interest Rate Risk - The Borough does not have a fonnal investment policy that limits investment maturities as ameans ofmanaging its exposure to fair value losses arising from increasing interest rates.The fair value of the above-listed investments were based on quoted market prices.Interest earned in the General Capital Fund, Animal Control Fund and certain Other Trust Funds are assigned to theCurrent Fund in accordance with the regulatory basis of accounting.

NOTE3 TAXES RECEIVABLEReceivables at December 31, 2010 and 2009 consisted of the following:

2010 2009CurrentProperty Taxes $ 575,458 $ 572,736Tax Title Liens 3,022 2,401

$ 578,480 $ 575,137In 2010 and 2009, the Borough collected $572,735 and $668,608 from delinquent taxes, which represented 99% and98% of the prior year delinquent taxes receivable balance.

27


34/112

BOROUGH OF DUMONTN O T E S T O F I N A N C ~ S T A T E M E N T SYEARS ENDEDDECEMBER 31, 2010 AND 2009

NOTE 4 MUNICIPAL DEBT

The Local Bond Law governs the issuance of honds and notes used to finance capital expenditures. General obligationbonds have been issued for the general capital projects. All bonds are retired in serial installments within the statutoryperiod of usefulness. Bonds issued by the Borough are general obligation bonds, backed by the full faith and credit ofthe Borough. Bond anticipation notes, which are issued to temporarily finance capital projects, must be paid offwithinten years and four months or retired by the issuance of bonds.The Borough's debt is summarized as follows:IssuedGeneralBonds, Notes and Loans

Less Funds Temporarily Held toPay Bonds and Notes

Authorized But Not IssuedGeneralBonds and Notes

$ 20,737,826 $

21,71820,716,108

1,890,148

16,578,266

16,578,266

5,246,782Net Bonds and Notes Issued and AuthorizedBut Not Issued

Statutory Net Debt$ 22,606,256 ; ; ; . $ ~ . , ; ; 2 c o l " " , 8 ; ; ; ; 2 5 ~ , 0 ; ; . . 4 ; . ; ; . 8

The statement of debt condition that follows is extracted from the Borough's Annual Debt Statement and indicates astatutory net debt of .96% and .91% at December 31, 2010 and 2009, respectively.

2010General DebtSchool Debt

Total

2009General DebtSchool Debt

Total

Gross Debt Deductions Net Debt$ 22,627,974 $ 928,718 $ 21,699,256

19,510,000 19,510,000$ 42,137,974 $ 20,438,718 $ 21,699,256

Gross Debt Deductions Net Debt$ 21,825,048 $ 925,000 $ 20,900,048

20,295,000 20,295,000$ 42,120,048 $ 21,220,000 $ 20,900,048

28


35/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 4 MUNICIPAL DEBT (Continued)Statutory Borrowing PowerThe Borough's remaining borrowing power under NJ.S. 40A:2-6, as amended, at December 3 I, was as follows:

3-1/2% ofEqualized Valuation Basis (Municipal)Net Debt $ 78,645,742 $21,699,256 80,379,38520,900,048Remaining Borrowing Power

Long-Term Debt

$ 56,946,486 ; ; : $ ~ - , 5 ; ; ; , 9 " " ,4 ~ 7 9 " " , , , , 3 3;.;,.7

The Borougb's long-term debt consisted of the following at December31:General Obligation BondsThe Borough levies ad valorem taxes to pay debt service on general obligation bonds. General obligation bondoutstanding at December 31 are as follows:

$2,973,000, 1999 Bonds, due in annualinstalhnents of$340,000 to $403,000through February 13,2013; interest at 5.05%$3,250,000, 2003 Bonds, due in annualinstallments of$175,000 to $610,000through May 1,2016, interest at 3.25% - 3.55%$8,530,000,2010 Bonds, due in annualinstallments of $ I00,000 to $ I ,095,000through July, 2025, interest at 1.5% - 4.0%

$ 1,103,000 $

2,305,000

8,530,000

1,428,000

2,470,000

29

$ I 1,938,000 ,;;.$ ~ - - - , , " 3 b O ' 8 ~ 9 8 " " " O ~ O . . - - O


36/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 4 MUNIClPAL DEBT (Continued)

Long-Term Debt (Continued)Intergovernmental Loans PayableThe Borough has entered into loan agreements with the New Jersey Green Trust Fund and the EnvironmentalInfrastructure Trust Fund. The Borough levies ad valorem taxes to pay debt service on general intergovernmentalloans issued. Intergovernmental loans outstanding at December 31 are as follows:

2010 2009Green Acres Trust Fund$124,946, Bonds, due in semi-annualinstallments of $3,479through 2011, interest at 2% $ 3,479 $ 10,333$200,000, Bonds, due in semi-annualinstallments of $4,390 to $6,157through 2028, interest at 2% 182,872 191,521

Total Green Acres Trust Fund $ 186,351 $ 201,8542010 2009

Environmental Infrastructure Trust$1,675,000 Trust Loan, due in annual installmentsof $65,000 to $125,000 through 2027, interestat 3.4% to 5.0% $ 1,555,000 $ 1,615,000$1,572,000 Fund Loan, due in semi-annual installmentsof$I,681 to $80,765 through 2027 interest free 1,426,475 1,510,206$965,000 Trust Loan, due in annual installmentsof $35,000 to $70,000 through 2029, interestat 3.5% to 5.0% 965,000$2,850,000 Fund Loan, due in semi-annualinstallments of$50,893 and $101,786through 2029, interest free 2,850,000

Total Environmental Infrastructure Trust 6,796,475 3,125,206Total Intergovernmental Loans $ 6,982,826 $ 3,327,060

30


37/112


NOTE 4 MUNICIPAL DEBT (Continued)

Long-Term Debt (Continued)The Borough's principal and interest for long-term debt issued and outstanding as ofDecember 31, 2010 is as follows:

General Bonds Intergovernmental LoansEnyironmentallnfrastructure Green Acres

CalendarYear Principal Interest Principal Interest Principal Interest Total

2011 $ 615,000 $ 389,775 $ 286,782 $ 110,418 $ 12,302 $ 3,649 $ 1,417,92012 640,000 364,609 335,618 105,768 9,000 3,436 1,458,42013 663,000 338,106 342,384 101,808 9,181 3,255 1,457,72014 680,000 313,943 345,833 97,608 9,366 3,071 1,449,82015 700,000 291,805 352,402 93,088 9,554 2,882 1,449,7

2016-2020 3,860,000 1,180,453 1,844,577 375,340 50,730 11,454 7,322,52021-2025 4,780,000 567,900 1,998,027 214,740 56,037 6,146 7,622,82027-2029 1,290,852 43,101 30,181 912 1,365,0

Total $ 11,938,000 $ 3,446,591 $ 6,796,475 $ 1,141,871 $ 186,351 $ 34,805 $ 23,544,0

Changes in Long-TermMunicipal DebtThe Borough's long-term capital debt activity for the years 2010 and 2009 were as follows:

Balance, Balance, DueDecember 31, December 3 I, Within

2009 Additions Reductions 2010 One Year2010General Capital FundBonds Payable $ 3,898,000 $ 8,530,000 $ 490,000 $ 11,938,000 $ 615,000Intergovernmental Loans Payable 3,327,060 3,815,000 159,234 6,982,826 299,084

General Capital Fund Long-TermLiabilities $ 7,225,060 $ 12,345,000 $ 649,234 $ 18,920,826 $ 914,084

31


38/112

BOROUGH OF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31,2010 AND 2009

NOTE 4 MUNICIPALDEBT (Continued)

Changes in Long-Term Municipal Debt (Continued)

2009General Capital FundBonds PayableIntergovernmental Loans Payable

Balance,December 3 I,2008 Additions

$ 4,358,0003,464,052 ,,--$ _

Balance,December 31,

Reductions 2009

$ 460,000 $ 3,898,000 $136,992 3,327,060

DueWithinOne Year

490,000159,234General Capital Fund Long-TermLiabilities

Short-Term Debt$ 7,822,052 ",,$ _ $ 596,992 $ 7,225,060 $ 649,234

The Borough's short-term capital debt activity for the years 2010 and 2009 was as follows:

8,428,206 ",,$ _ ~ 9 ~ 1 0;;;;.,0""0,,,,0

$ 7,466,000 $ 8,428,206 $ 7,466,000 $ 8,428,206

2010Bond Anticipation NotesGeneral Capital Fund

2009Bond Anticipation NotesGeneral Capital Fund


2009$ 8,428,206 $

Balance,December 31,2008

Additions910,000 $

Additions

Reductions

Reductions


2010

Balance,December 31,2009

In addition to the debt shown in the above schedule, municipalities may issue debt to meet cash flow needs totemporarily finance operating expenditures. This debt which is not included in the Borough's regulatory debt limicalculation is reported in the Current Fund for the year 2009 as follows:

Balance, Balance,December 31, December 31,

2008 Additions Reductions 20092009Special Emergency Notes $ 172,000 $ $ 172,000

$ 172,000 $ $ 172,000 $32


39/112

BOROUGH OFDUMONTNOTES TO FINANCIALSTATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 5 FIXEDASSETSGeneral Fixed AssetsThe following is a summary of changes in the general fixed assets account group for the years 2010 and 2009.

Balance Balance,December 31, December 31,

2009 Additions Retirements 20102010Land $ 3,093,893 $ 3,093,893Buildings and Building 1 m p r o v e m e n t ~ 4,162,564 $ 16,952 4,179,516Machinery and Equipment 6,111,184 166,522 6,277,706

$ 13,367,641 $ 183,474 $ $ 13,551,115Balance Balance,

December 31, December 31,2008 Additions Adjustments 2009

2009Land $ 3,091,386 $ 2,507 $ 3,093,893Buildings and Building I m p r o v e m e n t ~ 5,840,405 (1,677,841) 4,162,564Machinery and Equipment 5,252,670 858,514 6,111,184

$ 14,184,461 $ $ (816,820) $ 13,367,641

NOTE 6 DUE TOIFROMOTHER FUNDSAs of December 31, interfund receivables and payab1es that resulted from various interfund transactions were afollows:

2010 2009Due from Due to Due from Due to

Other Funds Other Funds Other Funds Other FundsCurrent Fund $ 15,728 $ 15,088Animal Control Fund $ 4,761 $ 6,576Other Trust Fund 9,629 8,494General Capital Fund 1,337 17Public Assistance Fund 1 1

Total $ 15,728 $ 15,728 $ 15,088 $ 15,088

33


40/112

BOROUGH OFDUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDEDDECEMBER 31,2010 AND 2009

NOTE 6 DUE TOIFROMOTHER FUNDS

The interfund balances are the result of expenditures being paid by one fund on behalfof another, revenues earned inone fund but owing to another fund and/or to cover cash balances which were in an overdraft position.The Borough expects all interfund balances to be liquidated within one year.

NOTE 7 FUND BALANCES APPROPRIATEDUnder the regulatory basis of accounting, fund balance in the Current Fund is comprised of cash surplus (fund balance)and non-cash surplus (fund balance). All or part of cash surplus as of December 31 may be anticipated in thesubsequent year's budget. The non-cash surplus portion of fund balance may be utilized in the subsequent year'sbudget with the prior written consent of the Director of the Division ofLocal Government Services if certain guidelinesare met as to its availability. Fund balances at December 31, which were appropriated and included as anticipatedrevenue in their own respective fund's budget for the succeeding year were as follows:

Fund FundBalance Utilized Balance Utilized

December 31, in Subsequent December 3 1, in Subsequent2009 Year's Budget 2010 Year's Budget

Current FundCash Surplus $ 1,096,094 $ 805,000 $ 1,246,118 $ 805,000 (A)Non-Cash Surplus 156,577 76,473

$ 1,252,671 $ 805,000 $ 1,322,591 $ 805,000

(A)The above fund balance represents the surplus anticipated in the 2011 introduced municipal budget. The 2011municipal budget has not been legally adopted as of the date ofaudit.

34


41/112

BOROUGHOFDUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER31, 2010 AND 2009

NOTE 8 DEFERRED CHARGES TOBERAISED IN SUCCEEDINGBUDGETSCertain expenditures are required to be deferred to budgets of succeeding years. At December 31, the followingdeferred charges are reported on the balance sheets of the following funds:

Subsequent YearBalance Budget

December 31, Appropriation Balance2010Current FundSpecial Emergency Authorization (40A:4-55) $ 14,000 $ 14,000 $

$ 14,000 $ 14,000 $Subsequent Year

Balance BudgetDecember 3I , Appropriation Balance

2009Current FundEmergency Authorization $ 7,818 $ 7,818Special Emergency Authorization (40A:4-55) 43,000 29,000 $ 14,000

$ 50,818 $ 36,818 $ 14,000

NOTE 9 COMPENSATED ABSENCESUnder the existing policies and labor agreements of the Borough, employees are allowed to accrue unused vacationbenefits, personal, sick leave which may be taken as time offor paid upon retirement at an agreed upon rate.It is estimated that the current cost of such unpaid compensation and salary related payments would approximate$2,363,959 and $2,128,000 at December 31, 2010 and 2009, respectively. These amounts which are consideredmaterial to the financial statements, are not reported either as an expenditure or liability.

NOTE 10 EMPLOYEERETIREMENT SYSTEMSThe State of New Jersey sponsors and administers the following contributory defined benefit public employeeretirement systems (retirement systems) covering substantially all state and local government employees whichincludes those Borough employees who are eligible for pension coverage.

35


42/112


43/112

BOROUGH OFDUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 10 EMPLOYEERETIREMENT SYSTEMS (Continued)

InvestmentValuationInvestments are reported at fair value. Securities traded on a national or international exchange are valued at the lasreported sales price at current exchange rates. Mortgages are valued on the hasis of future principal and interespayments, and are discounted at prevailing interest rates for similar instruments. The fair value of real estatinvestments is based on independent appraisals. Investments that do not have an established market are reported aestimated fair values.The State of New Jersey, Department of the Treasury, Division of Investment, issues publicly available financiareports that include the financial statements of the State of New Jersey Cash Management Fund, Common PensionFund A, Common Pension Fund B, Common Pension Fund D and Common Pension Fund E. The financial reportsmay he obtained by writing to the State of New Jersey, Department of the Treasury, Division of Investment, P.OBox 290, Trenton, New Jersey 08625-0290.Significant LegislationP.L. 2010, c.l, effective May 21, 2010, made a numher of changes to the State-administered retirement systemconcerning eligibility, the retirement allowance formula, the definition of compensation, the positions eligible forservice credit, the non-forfeitable right to a pension, the prosecutor's part of the PERS, special retirement under thePFRS, and employer contrihutions to the retirement systems.This new legislation changed the membership eligibility criteria for new members of PERS from the amount oannual compensation to the number of hours worked weekly. Also, it returned the benefit multiplier for newmembers of PERS to 1/60 from 1/55, and it provided that new members of PERS have the retirement allowancecalculated using the average annual compensation for the last five years of service instead of the last three years oservice. New members of PERS will no longer receive pension service credit from more than one employerPension service credit will be earned for the highest paid position only. For new members of the PFRS, the lawcapped the maximum compensation that can be used to calculate a pension from this plan at the annual wagecontribution base for Social Security, and requires the pension to be calculated using a three year average annuacompensation instead of the last year's salary. This law also closed the prosecutor's part of the PERS to newmembers and repealed the law for new members that provided a non-forfeitable right to receive a pension based onthe laws of the retirement system in place at the time five years of pension service credit is attained. The law alsorequires the State to make its full pension contribution, defined as II?''' of the required amount, beginning in FiscaYear 2012.P.L. 2010, c.3, effective May 21,2010, replaced the accidental and ordinary disability retirement for new membersof the PERS with disability insurance coverage similar to that provided by the State to individuals enrolled in theState's Defined Contribution Retirement Program.

37


44/112


NOTE 10 EMPLOYEE RETiREMENT SYSTEMS (Continued)Funded Status and Funding ProgressAs of June 30, 2009, the most recent actuarial valuation date, the aggregate funded ratio for all the Stateadministered retirement systems, including PERS and PFRS, is 66.0 percent with an unfunded actuarial accruedliability of $45.8 billion. The aggregate funded ratio and unfunded accrued liability for the State-funded systems is62.0 percent and $30.7 billion, and the aggregate funded ratio and unfunded accrued liability for local PERS andPFRS is 72.] percent and $] 5.1 billion.The funded status and funding progress of the retirement systems is based on actuarial valuations which involveestimates of the value of reported amounts and assumptions about the probability of events far into the future.These amounts are subject to continual revision as actual results are compared to past expectations and newestimates are made about the probability of future events.Actuarial calculations reflect a long-term perspective and are based on the benefits provided under the terms of theretirement systems in effect at the time of each valuation and also consider the pattern of the sharing of costsbetween the employer and members at that point in time. The projection of benefits for financial reporting purposesdoes not explicitly incorporate the potential effects of legal or contractual limitations on the pattern of cost sharingbetween the employer and members in the future.Actuarial Methods and AssumptionsIn the June 30, 2009 actuarial valuation, the projected unit credit was used as the actuarial cost method, and the fiveyear average of market value was used as the asset valuation method for the retirement systems. The actuarialassumptions included (1) 8.25 percent for investment rate of return for all the retirement systems except CPFPF; and(2) 5.45 percent for projected salary increases for all the retirement systems except PFRS.Employer and Employee Pension ContribntionsThe contribution policy is set by laws of the State ofNew Jersey and contributions are required by active membersand participating employers. Plan members and employer contributions may be amended by State of New Jerseylegislation, with the amount of contributions by the State ofNew Jersey contingent upon the annual AppropriationsAct. As defined, the various retirement systems require employee contributions based on 5.50% for PERS and8.50% for PFRS of employees' annual compensation.

38


45/112

BOROUGHOFDUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 10 EMPLOYEERETIREMENT SYSTEMS (Continued)

Annual Pension Cost (APC)Per the requirements of GASB Statement No. 27 for the year ended June 30, 20I0 for PFRS and PERS, which arecost sharing multi-employer defined benefit pension plans, annual pension cost equals contributions made.During the years ended Decemher 31, 2010, 2009 and 2008, the Borough was required to contribute for normal costpension contrihutions the following amounts which equaled the required contributions for each year:

Year EndingDecember 31, CPFPF PFRS PERS

2010 $ 776,701 $ 271,4242009 733,762 236,6852008 $ 18,019 659,569 189,570

NOTE 11 POST-RETIREMENT MEDICAL BENEFITSThe State of New Jersey sponsors and administers the post-retirement health henefit program plans for participatingmunicipalities including the Borough.As a result of implementing Governmental Accounting Standards Board (GASB) Statement No. 43, FinancialReporting for Post-employment Benefit Plans Other than Pension Plans (OPEB), effective for Fiscal Year 2007, theState Health Benefits Program (SHBP), and the Prescription Drug Program (PDP), and Post-Retirement Medical (PRM)of the PERS and the Teachers Pension and Annuity (TPAF) are combined and reported as Pension and Other EmployeeBenefit Trust Funds in the State's Comprehensive Annual Financial Report (CAFR). Specifically, SHBP-State, PDPState, and the PRM of the PERS are combined and reported as Health Benefits Program Fund - State classified as asingle employer plan. The SHBP-Local, PDP-Local, and the PRM of the TPAF-Local are comhined and reported as aHealth Benefits Program Fund -Local Government classified as a cost sharing multiple-employer plan. The postretirement benefit programs had a total of 514 state and local participating employers and contributing entities for FiscalYear 2010.Health Benefits Program Fund (HBPF) - Local Government (including Prescription Drug Program Fund) - Certainlocal employers who participate in the State Health Benefits Program provide health insurance coverage to theiremployees at retirement. Under provisions of P.L. 1997, c.330, the State of New Jersey provides partially fundedhenefits to local police officers and firefighters who retire with 25 years of service (or on disability) from an employerwho does not provide coverage. Retirees who are not eligihle for employer paid health coverage at retirement cancontinue in the program hy paying the cost of the insurance for themselves and their covered dependents. Also, localemployees are eligihle for the PDP coverage after 60 days ofemployment.

39


46/112

BOROUGH OF DUMONTNOTES TO FINANClAL STATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 11 POST-RETIREMENTMEDICAL BENEFITS (Continued)

Health Benefits Program Fund (HBPF) - Local Government (Continued)The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly availablefinancial reports that include the financial statements and required supplementary infonnation of the above Fund. Thefinancial reports may be assessed via, the New Jersey, Division of Pensions and Benefits website awww.state.nj.us/treasury/pensions.Basis of AcconntingThe financial statements of the health benefit programs are prepared on the accrual basis of accounting. Employecontributions are recognized when payable to the health benefit programs. Benefits or refunds are recognized when dueand payable in accordance with the terms of the health benefit programs.Investment ValnationInvestments are reported at fair value. Investments that do not have an established market are reported at estimated faivalues.Funded Statns and Funding ProgressAs of June 30, 2009, the most recent actuarial valuation date, the State had a $56.8 billion unfunded actuarial liabilityfor other postemployment benefits (OPEB) which is made up of $20.5 billion for state active and retired members and$36.3 billion for education employees and retirees that become the obligation of the State of New Jersey uponretirement.The funded status and funding progress of the OPEB is based on actuarial valuations which involve estimates of thevalue of reported amounts and assumptions about the probability of events in the future. These amounts are subject tocontinual revision as actual results are compared to past expectations and new estimates are made about the probabilityof future events.Actuarial calculations reflect a long-tenn perspective and are based on the benefits provided under the tenns of theOPEB in effect at the time of each valuation and also consider the pattern of the sharing of costs between the employeand members at the point in time. The projection of benefits for financial reporting purposes does not explicitlyincorporate the potential effects of legal contractual funding limitations on the pattern of cost sharing between theemployer and members in the future.

40


47/112

BOROUGH OFDUMONTNOTESTOFINANClALSTATEMENTSYEARS ENDED DECEMBER 31, 2010 AND 2009

NOTE 11 POST-RETIREMENTMEDICAL BENEFITS (Continued)Actuarial Methods and AssumptionsIn the June 30, 2009 actuarial valuation, the projected unit credit was used as the actuarial cost method, and the markevalue was used as asset valuation method for the OPEB. The actuarial assumptions included 4.50 percent foinvestment rate of return for the OPEB.Post-RetirementMedical Benefits ContributionP.L. 1987, c. 384 and P.L. 1990, c.6 required the Public Employees' Retirement System to fund post-retirement medicabenefits for those State and participating local government employees who retire after accumulating 25 years of creditedservice or on a disability retirement. As of June 30,2010, there were 87,288 retirees receiving post-retirement medicabenefits. The cost of these benefits is funded through contributions by the State and participating local governments inaccordance with P.L. 1994, c.62. Funding of post-retirement medical benefits changed from a pre-funding basis to apay-as-you-go basis beginning in Fiscal Year 1994.P.L. 1977, c. 136 provides for the State and participating local governments to pay health benefits on a pay-as-you-gobasis for all enrolled retired employees, regardless of retirement date, under two provisions. The first is for employeewhose pensions are based on 25 years or more of credited service (except those who elect a deferred retirement). Thesecond is for retired employees who are eligible for a disability retirement regardless of years of service. The State andparticipating local governments contributed $97.6 million for 7,667 eligible retired members for Fiscal Year 2010.P.L. 1997, c. 330 provides paid post-retirement health benefits to qualified retirees of the Police and Firemen'Retirement System and the Consolidated Police and Firemen's Pension Fund and to dependents of qualified retireesThe State and participating local governments are responsible for 80 percent of the premium for the category ocoverage elected by the retiree under the State managed care plan or a health maintenance organization participating inthe program, whichever provides the lower charge. The State and participating local governments contributed $28.8million in Fiscal Year 2010 to provide benefits under Chapter 330 to qualified retirees.The State sets the employer contribution rate based on a pay-as-you-go basis rather than the annual requirecontribution of the employers (ARC), an amount actuarially determined in accordance with the parameters of GASBStatement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover nonnal coseach year and amortize any unfunded actuarial liabilities (or funding excess) of the plan over a period not to exceedthirty years. The Borough's contributions to the State Health Benefits Program Fund-Local Government for postretirement benefits for the years ended December 31, 2010, 2009 and 2008 were $309,888, $288,756 and $269,990respectively, which equaled the required contribution. In addition, the Borough's reimbursements to eligible retiredemployees for Medicare Part B insurance coverage for the years ended December 31, 2010, 2009 and 2008 were$3,436, $3,436 and $3,436, respectively.

41


48/112

BOROUGHOF DUMONTNOTES TO FINANCIAL STATEMENTSYEARS ENDED DECEMBER31, 2010 AND 2009

NOTE 12 RISKMANAGEMENT

The Borough is exposed to various risks of loss related to general liability, automobile coverage, theft of, damage to anddestruction of assets; errors and omissions; injuries to employees; termination of employees and natural disasters. TheBorough has obtained commercial insurance coverage to guard against these events to minimize the exposure to tbeBorough should they occur.The Borough of Dumont is a member of the Bergen County Municipal Joint Insurance Fund (BJIF) and MunicipalExcess Liability Joint Insurance Fund (MEL). The joint insurance funds are both an insured aud self-administeredgroup of municipalities established for the purpose of insuring against property damage, general liability, motorvehicles and equipment liability and worker's compensation. The Funds are risk-sharing public entity pools. The BJIPand MEL coverage amounts are on file with the Borough.The relationship between the Borough and respective insurance funds is govemed by a contract and by-laws that havebeen adopted by resolution of each unit's governing body. The Borough is contractually obligated to make all annualand supplementary contributions to the insurance funds, to report claims on a timely basis, to cooperate with themanagement of the funds, its claims administrator and attorneys in claims investigation and settlement, and to followrisk management procedures as outlined by the funds. Members have a contractual obligation to fund any deficit of thefunds attributable to a membership year during which the municipality was a member.The funds provide its members with risk management services, including the defense of and settlement of claims, andestablished reasonable and necessary loss reduction

dumont 2010 audit report

Documents